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Question 4 Consider an economy described by the following equations: Y = C + I + G Yf= 73000 C = 2800 + 0.8 (Y T) I = 4200 G =8000 T = 1200 a) Calculate the short-run equilibrium output and the output gap. (3 marks) b) lfthe government adopt scal policy to eliminate the output gap, how much government spending have to change? Is it an increase or decrease in government spending? (2 marks) c) lfthe government adopt scal policy to eliminate the output gap, how much tax have to change? Is it an increase or decrease in tax? (2 marks) d) What type is the government fiscal policies as described in (b) and (c)? (1 mark) e) Suggest two actions by central bank which may achieve the same impact as the fiscal policies described in (b) and (c). (2 marks)